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You have a dual-status tax year when you have been both a resident alien and a nonresident alien in the same year. Dual status does not refer to your citizenship; it refers only to your resident status in the United States. In determining your U.S. income tax liability for a dual-status tax year, different rules apply for the part of the year you are a resident of the United States and the part of the year you are a nonresident.
For the part of the year you are a resident alien, you are taxed on income from all sources. Income from sources outside the United States is taxable if you receive it while you are a resident alien. The income is taxable even if you earned it while you were a nonresident alien or if you became a nonresident alien after receiving it and before the end of the year.
For the part of the year you are a nonresident alien, you are taxed on income from U.S. sources and on certain foreign source income treated as effectively connected with a U.S. trade or business.
You must file Form 1040 if you are a dual-status taxpayer who becomes a resident during the year and who is a U.S. resident on the last day of the tax year. Write “Dual-Status Return” across the top of the return. Attach a statement to your return to show the income for the part of the year you are a nonresident. You can use Form 1040NR or Form 1040NR-EZ as the statement, but be sure to mark “Dual-Status Statement” across the top.
Please post your questions.
so since I already e-filed 1040 for the US wages, I now need to file a 1040NR adding the “Dual-Status Statement” across the top?
Can you define non resident alien for me? Is it the time I spend in the US with a visa?
You need to attach a statement to your return to show the income for the part of the year you are a nonresident. You MAY use the form 1040NR as your statement - but you are not required - you may simply use a note with explanations. If you already filed and did not attach a stement - you need to amend your tax return and add an attachment.
ok so I cannot just file the 1040NR adding a note that I already e-filed my 1040. TurboTax does not handle 1040NR so their response was to file it separately.
I guess I need to ask them how to amend
That is correct TurboTax doesn't allow to file tax returns for the dual-status tax year.
To amend - you need to use form 1040X.
so I file both 1040X and 1040NR? Also where in 1040NR do I put the income from my italian employer (wages)?
There are some restrictions if you are filing a tax return for a dual-status tax year.- You cannot use the standard deduction allowed on Form 1040. However, you can itemize any allowable deductions.- You cannot file a joint return unless you choosing Resident Alien Status.- You generally cannot claim the education credits, the earned income credit, or the credit for the elderly or the disabled.
so I file both 1040X and 1040NR? Also where in 1040NR do I put the income from my Italian employer (wages)?You do not file BOTH forms. You file ONLY ONE tax return - and that is on the form 1040. The form 1040X is need to make corrections to your original filing.Form 1040NR is NOT used as the tax return in your situation - but as an attachment to your tax return. On form 1040NR you report ONLY income from US sources before you became US resident.
so I file 1040X outside from TurboTax and in there I add the income for the 6 months of non resident.
Gross? Where do I declare the taxes I already payed in Italy?
For the part of the year you are a nonresident alien, you are taxed on income from U.S. sources and on certain foreign source income treated as effectively connected with a U.S. trade or business.Other income is not taxed and is not reported.
my income is not from US sources. Is Italy a country where the foreign source income is treated as connected with a US trade or business?
The foreign tax credit is only available for the time you was a resident alien. There is no foreign tax credit for the time you was a nonresident alien.
If you income in Italy was received BEFORE you became a resident alien - there is no need to report that income.
good so I declare the gross earning from Italy for the 6 months and that income is not taxed. Correct?
yes the income in italy was received BEFORE I moved to the US
There is NO need to declare your foreign income for the time you was a nonresident alien.
then since I resigned I did not receive any additional compensation
oh great so I'm all set and I do not need to amend
You mentioned that you did not attach a statement - correct?
If you going to correct that - you need to file an amended tax return and attach a statement.
there is not time overlap between the italian income and the US non alien residency
Is that a statement or a question?
now you are confusing me: I filed 1040 without any statement about foreign income and since the foreign income was received before the move I do not need to declare it
so why are you now saying that I need to correct the 1040 filing
that was a statement
That is correct - however - You must file Form 1040 if you are a dual-status taxpayer who becomes a resident during the year and who is a U.S. resident on the last day of the tax year. Write “Dual-Status Return” across the top of the return. Attach a statement to your return to show the income for the part of the year you are a nonresident.Did you Write “Dual-Status Return” across the top of the return? - I assume no..Did you attach a statement? - I assume no..Are you going to correct that? - If yes - the only way is to file amended tax return.
but do I have to correct that? At this point it would be just to inform and provide a complete 2012 picture, correct?
That is something you need to decide if you are going to correct mistakes with your original filing.However if you do decide to correct - the way to do that is filing form 1040X even if there are no changes in tax liability.Do you have your 2010 tax return with you? Can you verify if you used schedule A?
2010 tax return? I did that in Italy where I resided at the time
Sorry - 2012 tax return - sorry for typo.
np :) let me check
is Schedule A for itemized deduction?
Yes - I am asking because you may only itemize as a dual resident.
not sure if I itemized.. I did deduct moving expenses and child
Moving expenses are OK.what amount you have on form 1040 line 40?
I had no other deductions and imported my employer's W2
That is the standard deduction that you may not use... As a Dual-Status Aliens - you are not allowed to itemize...See IRS publication 519 - http://www.irs.gov/pub/irs-pdf/p519.pdfpage 32 - middle column - Restrictions for Dual-Status Taxpayers.1) Standard deduction. You cannot use the standard deduction allowed on Form 1040. However, you can itemize any allowable deduc-tions.
What filing status did you choose? Plz verify on form 1040 - boxes 1 - 5 - which one is checked?
unless I choose the resident status alien and then at that point I do the 1040X to amend, adding the foreign income?
married filing jointly
unless I choose the resident status alien and then at that point I do the 1040X to amend, adding the foreign income?That is correct - you MAY choose to be treated as a resident alien for the WHOLE year - and report ALL your worldwide income - including those you received in Italy - that would be your choice - you do not have to do that.
In this case you would be taxed the same way as all other US persons and there would not need for the foreign income statement.
or I amend selecting the single filing status?
and add the 1040NR
Before any amending - you need to decide if you file as a dual status alien OR you choose to be treated as a resident alien for the whole year. There are different reporting requirements.
such as?For instance, as I already mentioned Dual-Status Taxpayers cannot use the standard deduction... cannot use married filing jointly status...
ok that vs being taxed with US % also on the foreign income (if taxes payed in Italy are less than in the US)
and finally - TurboTax doesn't support tax filing for Dual-Status Taxpayers...What you actually did - you filed the tax return as a whole year residents - but reported income only for the part of the year. That is up to you how you want to correct that.
at this point I need to amend it with 1040X adding the income from Italy. The funny thing is that I did add information with the date I entered the US and that previously I was in a foreign country and that did not trigger anything on TurboTax
it should have warned me about the dual status
thanks for you time and expertise
at this point I need to amend it with 1040X adding the income from Italy. The funny thing is that I did add information with the date I entered the US and that previously I was in a foreign country and that did not trigger anything on TurboTaxAs I know - TurboTax doesn't allow to file support tax filing for Dual-Status Taxpayers...That is not a professional software - and doesn't support many other complex situations.If you chose to be treated as a Dual-Status Taxpayer - you should not use TurboTax - or if you use - there are should be manual adjustments for which you are responsible.However - as we found out that corrections are needed - you need to decide HOW to correct.
yes I understand ... if I amend with the 1040X adding the foreign income, am I ok then?
If you choose to be treated as a resident alien for the WHOLE year - and report ALL your worldwide income - including those you received in Italy - that would be your choice.In this case - you may claim a credit for foreign taxes paid in Italy.
excellent and I imagine there is a form to claim the credit, right?
If the same income is taxable abroad and in the US - you may claim a credit for taxes paid abroad - so the same income would not be taxed twice. Use the form 1116 -http://www.irs.gov/pub/irs-pdf/f1116.pdf please find instructions here - http://www.irs.gov/pub/irs-pdf/f1116.pdfThe credit is limited by the US tax liability on the same income - the form 1116 is used to calculate the amount of credit. Means - if tax liability abroad is higher - there will not be US taxes on that income, but if tax liability abroad is lower - in the US you will pay the difference after the credit will be applied.
On form 1040 - the credit would be in line 47.
While there is a tax treaty between the US and Italy - the credit is NOT based on the treaty but is based on the US tax law.
last question: since I'll be filing the additional forms via mail, how do I connect them to the 1040 I efiled?
Changes to your original tax return should be done on form 1040X.You will attach to that 1040X - all other forms that are updated or new.
k so I attach the updated or new forms.. thanks
You will attach updated and mew forms to form 1040X.
;) got it ...thanks again. Bye!
You are welcome.